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Broadcasting Decision CRTC 2007-229

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Broadcasting Decision CRTC 2007-229

Licensing of new radio station to serve Sudbury, Ontario

The Commission approves the application by Larche Communications Inc. for a broadcasting licence to operate a new FM radio programming undertaking to serve Sudbury.

The Commission denies the remaining applications for broadcasting licences to serve the Sudbury radio market.

Introduction

1.

At a public hearing commencing 27 March 2007 in the National Capital Region, the Commission considered six applications for new radio stations to serve Sudbury, some of which are mutually exclusive on a technical basis.

2.

As part of this process, the Commission received and considered interventions with respect to each of the six applications considered. The public record for this proceeding is available on the Commission's web site at www.crtc.gc.ca under "Public Proceedings".

3.

After reviewing the applications and interventions, the Commission is of the view that there are two primary issues to be considered:

Can the Sudbury radio market sustain any additional radio services without an undue negative impact on the radio market?

If that market can sustain one or more additional stations, which of the applications should be approved, in light of the factors identified in Broadcasting Public Notice 2006-85 (the Call)?

The Sudbury radio market and its ability to sustain a new station

4.

The Sudbury radio market consists of five FM stations and one AM station. Rogers Broadcasting Limited (Rogers) offers the formats Rock (CJRQ-FM), Adult Contemporary (CJMX-FM) and Country (CIGM). Newcap Inc. (Newcap) offers Classic Hits on CHNO-FM, CJTK-FM is a Christian music service owned by Eternacom Inc., and The Haliburton Broadcasting Group Inc. operates CHYC-FM, a French-language radio station.

5.

In 2006, the Sudbury commercial radio market generated $9.5 million in advertising revenue, with a combined profit before interest and taxes (PBIT) margin of 20.9%. This level can be compared to 24.1% for Ontario and 20.1% for Canada. From 2002 to 2006, the average yearly growth in radio advertising revenue was 7.8% in the Sudbury market, which is higher than that experienced by almost all major Canadian markets over the same period.

6.

In addition to the healthy radio revenue growth noted above, the Sudbury economy is expected to continue to grow in the near future, according to the Conference Board of Canada. Among other things, retail sales are expected to increase by 5.3% on average each year over the next five years (2007 to 2011).

7.

According to the 2006 Census, the population of Sudbury was approximately 157,900 in 2006. The population had increased by 1.7% from the 2001 Census, as compared to 5.4% for Canada and 6.6% for Ontario during the same period.

8.

Based on the evidence that the Sudbury radio industry is healthy, and on the expected positive economic outlook, the Commission is satisfied that the market could support the licensing of one new commercial radio station without an undue negative impact on the Sudbury radio broadcasting market.

9.

In Broadcasting Public Notice 2006-159, the Commission set out its general concern with the relatively lower profitability of radio markets with populations under 250,000, and signalled its intent to avoid over-licensing in such markets. The Commission is of the view that the licensing of one new commercial radio station to serve the Sudbury market at this time is consistent with this intent.

Assessment of the applications

Criteria for assessment

10.

Having determined that there is room in the Sudbury market for an additional radio service, the Commission considered the six applications to serve Sudbury in light of the factors relevant to the evaluation of applications outlined in the Call, which include the factors set out in Broadcasting Decision 99-480.

11.

Although the Commission has considered all of the factors in the Call in assessing the proposed services, it considers that market impact, the quality of the applications, especially with respect to the applicants' business plans (which includes proposed music formats), and commitments to Canadian content development were particularly important and relevant to its determinations for the Sudbury market.

The applications

JOCO Communications Inc.

12.

JOCO Communications Inc. (JOCO) proposed to establish an English-language commercial FM radio station that would operate at 94.5 MHz (channel 233A) with an effective radiated power (ERP) of 1,350 watts. JOCO's proposed station would offer an Oldies music format, targeting an audience 50 years of age and older. A minimum of 40% of all musical selections from content category 2 (Popular Music) broadcast during the broadcast week and between 6 a.m. and 6 p.m. Monday through Friday, as well as 20% of all musical selections from content category 3 (Special interest music) would be Canadian selections, levels which exceed the minimum requirements set out in the Radio Regulations, 1986 (the Regulations). JOCO indicated that it would broadcast 19 hours of spoken word programming each week. Of all spoken word programming each week, at least 18 hours and 9 minutes would be devoted to news and surveillance information. The applicant indicated that, over and above the basic annual CCD contribution formula set out in Broadcasting Public Notice 2006-158, it would devote a total of $38,500 to Canadian content development (CCD) over seven consecutive broadcast years, upon commencement of operations.

William Wrightsell, on behalf of a corporation to be incorporated

13.

William Wrightsell, on behalf of a corporation to be incorporated (Wrightsell) proposed to establish an English-language commercial FM radio station that would operate at 94.5 MHz (channel 233A) with an ERP of 1,500 watts. The proposed station would offer an Adult Contemporary and Older Adult music format, designed to appeal to listeners over age 35, with a core audience of persons over the age of 40. A minimum of 40% of all musical selections from content category 2 (Popular Music) broadcast during the broadcast week and between 6 a.m. and 6 p.m. Monday through Friday would be Canadian selections, levels which exceed the minimum requirements set out in the Regulations. Wrightsell indicated that it would broadcast 8 hours and 21 minutes per week of spoken word programming, including over 4 hours of news, 40% of which would be local. Over and above the basic annual CCD contribution, the applicant indicated that it would devote a total of $104,740 to CCD over seven consecutive broadcast years, upon commencement of operations.

Newcap Inc.

14.

Newcap Inc. (Newcap) proposed to establish an English-language commercial FM radio station that would operate at 101.1 MHz (channel 266B) with an ERP of 50,000 watts. The proposed station would offer a hybrid Contemporary Hits music format, including mainstream and alternative pop, targeted to an audience aged 12-34. Newcap stated that it would broadcast 18 hours and 37 minutes of spoken word programming each week, of which over 6 hours would be devoted to news, of which at least 75% would be devoted to local coverage. In addition to the basic annual CCD contribution, the applicant would devote a total of $1,015,000 to CCD over seven consecutive broadcast years, upon commencement of operations.

Connelly Communications Corporation

15.

Connelly Communications Corporation (Connelly) proposed to establish an English-language commercial FM radio station that would operate at 101.1 MHz (channel 266C1) with an ERP of 66,000 watts. Connelly's proposed station would offer a Hot Adult Contemporary music format, targeting an audience between 25 and 44 years of age. Connelly indicated that it would broadcast a total of 18 hours of spoken word programming each week, of which at least 11 hours would be devoted to local news, sports, weather and community event programming. The applicant stated that, in addition to the basic annual CCD contribution, it would devote a total of $101,500 to CCD over seven consecutive broadcast years, upon commencement of operations.

Larche Communications Inc.

16.

Larche Communications Inc. (Larche) proposed to establish an English-language commercial FM station that would operate at 91.7 MHz (channel 219C)1 with an ERP of 50,000 watts. The proposed station would offer a New Country format, targeted to an audience between 35 and 64 years of age. A minimum of 40% of all musical selections from content category 2 (Popular Music) broadcast during the broadcast week and between 6 a.m. and 6 p.m. Monday through Friday would be Canadian selections, levels which exceed the minimum requirements set out in the Regulations. The applicant stated that it would broadcast at least 12.5 hours of local spoken word programming each week, including over 2 hours of news content. In addition to the basic annual CCD contribution, the applicant would devote a total of $350,000 to CCD over seven consecutive broadcast years, upon commencement of operations.

The Haliburton Broadcasting Group Inc., on behalf of a corporation to be incorporated

17.

The Haliburton Broadcasting Group Inc., on behalf of a corporation to be incorporated (Haliburton) proposed to establish an English-language commercial FM radio station that would operate at 88.5 MHz (channel 203C)2 with an ERP of 50,000 watts. Haliburton's proposed station would offer an Adult Standards/New Easy Listening music format, targeting an audience over the age of 45, with a core audience between 54 and 60 years of age. At least 20% of all musical selections would be instrumentals. A minimum of 40% of all musical selections from content category 2 (Popular Music) broadcast during the broadcast week and between 6 a.m. and 6 p.m. Monday through Friday would be Canadian selections, levels which exceed the minimum requirements set out in the Regulations. The applicant stated that it would broadcast 16.5 hours of spoken word programming each week, of which over 3 hours would be news, over 2 hours would be devoted to traffic and surveillance information, and 1 hour each week would consist of various spoken word features. Haliburton indicated that at least 50% of all weekly news content would be devoted to local coverage. With respect to CCD, the applicant indicated that, over and above the basic annual CCD contribution, it would devote a total of $333,157 to CCD over seven consecutive broadcast years, upon commencement of operations.

Commission's analysis

Larche

18.

The Commission notes that if Larche's proposal were approved, there would be no significant negative impact on the market, since no other FM station in Sudbury offers Country music. Larche's proposal to offer a New Country music format in Sudbury would therefore bring both a new editorial voice and additional diversity to the FM band in that market. The Commission notes that, while CIGM, a full-service AM station in Sudbury, offers extensive spoken word programming and mainstream Country music, it attracts an audience that is predominantly over 50 years of age. While recognizing that music formats are not regulated, the Commission is of the view that the music-intensive New Country music format proposed by Larche would provide increased musical diversity for adult Sudbury listeners interested in more contemporary Country music. The Commission further notes that Larche has experience in providing a Country music format in the Midland and Kitchener-Waterloo markets.

19.

The Commission further notes the commitments made by Larche, to the broadcast of Canadian music in excess of the minimum levels required under the Regulations, and to the financial support of CCD. The Commission also notes that, over and above the basic annual contribution to CCD, Larche committed to devote $50,000 per year to CCD, of which $20,000 would be directed to FACTOR. The remainder would be directed to eligible initiatives as follows:

$10,000 to the Country Talent Development Fund,

$10,000 to Canadian Music Week, and

$10,000 to Star Quest Talent Search.

Determinations

20.

Based on all of the above, the Commission approves the application by Larche Communications Inc. for a broadcasting licence to operate a new radio station in Sudbury. Terms and conditions for the new service are set out in the appendix to this decision.

21.

The Commission considers that approval of the Larche application will increase programming diversity by providing a musical format not currently offered on the FM band in Sudbury, augment the diversity of radio voices in the Sudbury market, and provide significant new support for Canadian content development. The addition of one new commercial radio service will have a limited impact on the Sudbury radio market.

22.

The Commission is of the view that the application by Larche best fulfils the criteria set out above for evaluating competing applications for new radio stations to serve Sudbury.

23.

Accordingly, the Commission denies the five remaining applications for broadcasting licences to operate new radio stations in Sudbury, as set out below.

Appendix to Broadcasting Decision CRTC 2007-229

Terms, conditions of licence,
expectations and encouragement

Issuance of the broadcasting licence to operate an English-language, commercial FM radio programming undertaking in Sudbury

Terms

The licence will expire 31 August 2013.

The station will operate at 91.7 MHz (channel 219B)3 with an effective radiated power of 50,000 watts.

The Department of Industry (the Department) has advised the Commission that, while this application is conditionally technically acceptable, it will only issue a broadcasting certificate when it has determined that the proposed technical parameters will not create any unacceptable interference with aeronautical NAV/COM services.

The Commission reminds the applicant that, pursuant to section 22(1) of the Broadcasting Act, no licence may be issued until the Department notifies the Commission that its technical requirements have been met, and that a broadcasting certificate will be issued.

Furthermore, the licence for this undertaking will be issued once the applicant has informed the Commission in writing that it is prepared to commence operations. The undertaking must be operational at the earliest possible date and in any event no later than 24 months from the date of this decision, unless a request for an extension of time is approved by the Commission before 12 July 2009. In order to ensure that such a request is processed in a timely manner, it should be submitted at least 60 days before that date.

Conditions of licence

1. The licence will be subject to the conditions set out in New licence form for commercial radio stations, Public Notice CRTC 1999-137, 24 August 1999, with the exception of condition of licence number 5.

2. The licensee shall, as an exception to the percentage of Canadian musical selections set out in sections 2.2(8) and 2.2(9) of the Radio Regulations, 1986, in any broadcast week:

a) devote, in that broadcast week, a minimum of 40% of its musical selections from content category 2 (Popular Music) to Canadian selections broadcast in their entirety; and

b) devote, between 6:00 a.m. and 6:00 p.m., in the period from Monday to Friday of the same broadcast week, 40% or more of its musical selections from content category 2 to Canadian selections broadcast in their entirety.

For the purposes of this condition, the terms "broadcast week", "Canadian selection", "content category" and "musical selection" shall have the same meaning as that set out in the Radio Regulations, 1986.

3. The licensee shall, upon commencement of operations, make a basic annual contribution to Canadian content development (CCD). The amount of the contribution shall be determined in accordance with the policy set out in Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006, (Public Notice 2006-158) as amended from time to time.

The licensee shall allocate 60% of this basic annual CCD contribution to FACTOR or to MUSICACTION.

The remainder of the basic annual contribution to CCD shall be allocated to parties and initiatives fulfilling the definition of eligible initiatives set out in paragraph 108 of Public Notice 2006-158.

This condition of licence shall expire upon the coming into force of the amendments to the Radio Regulations, 1986 relating to CCD.

4. In addition to the basic annual contribution, the licensee shall, upon commencement of operations, contribute $50,000 annually to the promotion and development of Canadian content. This amount is over and above the licensee's required basic annual CCD contribution. Of this amount, $20,000 per year shall be devoted to FACTOR. The remainder, $30,000, shall be allocated to parties and initiatives fulfilling the definition of eligible initiatives set out in paragraph 108 of Public Notice 2006-158.

Expectations

Canadian content development

In addition to the basic annual contribution to CCD, the Commission expects the licensee to contribute a total of $350,000 to CCD over a period of seven consecutive broadcast years upon commencement of operation, as proposed in the application.

Cultural diversity

The Commission expects the applicant to reflect the cultural diversity of Canada in its programming and employment practices.

Encouragement

In accordance with Implementation of an employment equity policy, Public Notice CRTC 1992-59, 1 September 1992, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Footnotes <>[1] In its original application, Larche proposed the use of frequency 91.7 MHz (channel 219C). The Department of Industry has reclassified the proposal as channel 219B.

[2] In its original application, Haliburton proposed the use of frequency 88.5 MHz (channel 203C). The Department of Industry has reclassified the proposal as channel 203B.

[3] In its original application, Larche proposed the use of frequency 91.7 MHz (channel 219C). The Department of Industry has reclassified the proposal as channel 219B.